Virgin results; mixed bag
May 5, 2009
Sales slightly down and losses increasing on Q1 to £123m (E138m) from £109m last time were the bad news while increased ARPU (£42.29 v £41.95) and a record low churn of 1.1% were the good news. Revenue for the quarter was £935.7m against £947.3m last time.
But the underlying fall in broadband sign-ons â€“ down to half the level of a year ago â€“ was, perhaps, the most significant trend. New subs dipped to just 47,300 from 88,400 in the same quarter last year, despite Virgin's heavy marketing of its fibre optic speeds. Virgin is trying to avoid commoditization as a pure broadband supplier, but the last thing it needs is a drop off in hi-speed sign ups. There are signs of new attempts to differentiate itself from Sky and other ISPs with the addition of data back up and music downloads. It also declared it was working on "capitalising on…convergence [of] broadcast TV with on-demand programming, web based entertainment and interactive features in a simple user-friendly format." This â€“ in as much as it means anything â€“ could mean joining Canvas, or developing its own integrated player or it may foreshadow a Universal Gateway approach with TV, web TV, home distribution and home IT management thrown in.
TV Subscriber sign-ups were down from 36,800 last year to 30,600, totaling 3.65 million. VOD is again being hailed as the differentiator with usage rising to 53 percent of customers from 46 percent last year, and clocking an average 55 million views, up from 36 million last year. It had over four million ITV VODs in its first month on Virgin. However, the vast majority of the VOD is catch ups which have little or no revenue generation for Virgin.